Daily Report – Bitcoin and Market Update (August 08 2022)
The weekly chart has closed yet another bar over the 200-week average support.
Freshly, after the new week opened, BTC has pushed higher into the new weekly highs. However, it’s still in the resistance area near the 25000 USD level.
The price action suggests that the main resistance levels stem from the polarity change principle, for which the role is played by the old support areas, before they broke down. As such, the levels are: 25401, 28600, 32950 USD. Those levels can be expected to be price barriers, as the prices of BTC approach these territories.
The 20-week average resistance aligns with the middle resistance level, mentioned above – at 28600 USD. It strengthens the concept of the price barrier in this zone.
The correlation coefficient has leveled up into the 0.93 ratio, on the 7-week basis versus the S&P 500 prices. As long as the correlation remains strong and positive, BTC is likely to follow the stock market movements, largely.
The middaily chart has shown a decent example of a BWAP breakout, as the most recent bar closed through the BWAP block – a resistance zone defined by the price and volume composite.
Price action wise, BTC has just closed a bar representing strength in the area where it showed weakness before. It may be considered a sign of strength, and bullish momentum building.
The CTF Trailer remains on the bullish note, in favour of the price appreciation for Bitcoin.
The CTF Stop has been adjusted upwards per the BPRO readings, to the 22797 USD level. As long as BTC trades or closes the session prices over this level, the bulls are in charge and have the upper vote – targeting higher price objectives, toward the 28000-30000 USD region.
The MTF chart is displaying another instance of a potential volatility breakout, as BTC attempts to cut through the BPRO High Momentum Band.
If confirmed with a daily close through the 24300 USD level, the volatility breakout may validate a stronger, more spectacular rally to the upside, as the recorded volatility would exceed the regular one. This could also be strengthened by a potential self-fulfilling prophecy effect from the buyers getting signals from similar volatility-based indicators. This could lead to buy orders clustering, pushing the prices higher, which may get additional boost from the regret bias traders who had missed previous entry opportunities.
The BPRO Band system suggests the regular volatility range within 22000-24300 USD zone. A failure to close outside either Band may suggest a mean-reverting move, back inside the projected range of volatility.
Furthermore, the Level Lines display support levels as defined below:
These levels could be anticipated to serve as level-to-level references. In other words, when one level is breached, the next one in the direction of the movement can be expected to act as the next “magnet”
The hourly chart confirms a short-term upwards breakout, over the main range high zone ~23500 USD.
While currently meeting a short-term resistance zone defined by the BWAP block, BTC has accelerated nicely enough to build an underlying momentum. If the breakout holds and does not break down, back below 23500 USD, BTC may continue the surge at a higher, stronger, and faster pace.
Additionally, chart pattern wise, the bottom pattern has proved a nice, rounded retest, also known as a saucer, or a cup. Such rounded bottoms are typically a sign of slow, but steady accumulation period, which works in favors of the bull traders.
Interestingly, as the market has gone upwards by a bit, the sentiment index has declined.
So, now at 30 points, the sentiment may still be classified under the category of fear, implying mean reversion trades in the upwards direction for the contrarian traders. However, the conditions are not as plausible as they were when BTC was trading based on the extreme fear sentiment records at 6 points on the scale.
As a result, BTC prices trading at 65% discount off the highs, builds fear among the traders – not only among those who had lost a lot in the bear market plunge, but also to those who have missed out on attractive prices due to their lack of discipline or behavioral biases.
Bitcoin: Net Unrealized Profit/Loss (NUPL)
At 0.06, the NUPL ratio maintains slightly positive figures, following the capitulation climax in June 2022.
So far, there has been only slight improvement in the amount of net unrealized profits, which may still suggest that – despite the BTC recovering 30% off the lows – there is little liquidity in the market, for the bears. Typically, this is discouraging from large short selling whales or institutions, as they would not benefit from bigger execution fees, and overall slippage.
Historically, quite often after BTC recovers from its capitulation at the market bottom, the NUPL continues to improve, which is also a sign of underlying momentum. It is, because the amount of liquidity (unrealized profits) in the market may be a proxy to understanding the momentum aggregation. The more the liquidity in the market, the greater the momentum can be build off of it.
More market details shared in my premium video report.